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  1. If you want to diversify an account to hold multiple currencies, what are the pros and cons of using currency ETFs versus holding the native currencies? For Australia, an example would be the ETF FXA. For Canada, the ETF would be FXC. It looks like these ETFs have expenses around 1/2 of 1%. One confusion for me is around what kind of short-term interest rates would you expect to be paid on cash balances held in a broker account as Australian and Canadian currency. FXA and FXC pay very little, which makes me wonder if FXA and FXC are secretly making something on money market cash balances and not paying those out to the ETF holders. Do any of you have opinions on which world currencies are good for diversification in a conservative portfolio? Obviously you want a currency for a country in which there is some real economic growth (nominal growth minus inflation), and you want a country that does not print currency in an inflationary way.
  2. Yahoo has some great symbols for tracking US government rates, short term through 30 year: ^IRX 13-week note ^FVX 5-year ^TNX 10-year ^TYX 30-year Is there any website that tracks short to long-term rates for government rates worldwide? I would love to have a handy reference for what government notes are paying in Canada, Australia, Switzerland, Hong Kong, etc. Bonus points if that same page tells me what the current rate of inflation is in the country.
  3. Does anyone have a good reference that would show what are the typical ranges of debt ratios in different industries? I'm thinking of things like: * debt-to-equity * debt-to-assets * debt-to-revenue and interest coverage ratios such as: * earnings-to-interest * EBITDA-to-interest Obviously debt-heavy businesses like REITs will have much different debt ratios than asset-light businesses like software.
  4. Bitcoin cannot be a store of value. Valuation - by definition - requires some kind of cash flow. You need earnings, dividends, interest, etc. Valuation of a commodity can be based on its use in an industrial context. Even fiat currencies can be valued, based on the underlying tax levying authority of a government. The governments of countries have value based on the taxes they can generate each year for the foreseeable future. Bitcoin has no cash flows whatsoever. It is solely valuable for transactions, yet this is a trivial function. Many virtual currencies exist and can be used for transactions. There is no sense in which a currency must have a store of value to be useful for transactions. Therefore any attempt to value Bitcoin is ultimately just tulip mania. A price of $0, $10, $100, $1000, $10K, $100K, and $1M per Bitcoin are equally valid valuations. Because ultimately 95% of the use of Bitcoin is speculators who buy Bitcoin on the erroneous belief that it is a store of value and must increase in value. Here is some Bitcoin trivia: 90% of the electrical and amortized capital cost to mine Bitcoin is NOT paid by the Bitcoin transaction fees!!!! Miners are spending wild amounts of electricity to do these transactions because the system bribes them by paying them more Bitcoin each time they successfully mine. The hilarious stupidity of Bitcoin is that people claim it cannot be "debased" because it has a fixed number of coins. That is pure nonsense because 90% of the transaction costs of this system are based on continuous debasement of the currency. Bitcoin is the definition of a system that can only exist if there is continuous debasement. Bitcoin advocates claim that once the system reduces rewards to miners that the system's "difficulty" will adjust down and the system will run on transaction fees alone. First, that is pure speculation and no one has a shred of proof that this will happen. The system could also just fail to work well in an environment where there are no rewards. But there is a bigger problem, relative to Bitcoin value. Today the system is caught in a rising price spiral because as Bitcoin values increase, miners spend more and more money to compete for Bitcoin. This increases the "difficulty", which increases the amount miners spend, which then helps to justify the rising price of Bitcoin. In his interview with CNBC, John Mcafee - who owns a Bitcoin mining firm - challenged Jaime Dimon by saying that his firm spends more than $1K per Bitcoin to mine it, *THEREFORE BITCOIN MUST HAVE VALUE*. We are in a crazy - and intellectually bankrupt - mania where people are using the price of Bitcoin mining to justify the price of Bitcoin itself. Do a simple thought experiment to see how utterly stupid this situation is. At some point in the future the issuance of new Bitcoins will stop. At that point miners must pay for each Bitcoin transaction with transaction fees alone. Since no one will want to spend $100/transaction to buy or sell Bitcoin, the system's difficulty will need to adjust way down, in order for electrical costs to match what transaction fees alone will pay. Assume at this future date that the transaction fee is $5, which might correspond to a cost per block of something like $1K. What happens to the price of Bitcoin in a world where Bitcoin blocks cost $1K to mine instead of $50K to mine? Using John Mcafee's logic, is Bitcoin now worth $80 because he now spends the equivalent of $1000 per block / 12.5 coins per block to mine (using today's 12.5 coin mining reward as an arbitrary reference point)? It is completely flawed reasoning to tie the "value" of Bitcoin to the price that miners spend mining blocks. Yet, today, the really scary situation we have is that the cost to mine coins is the ONLY justification for Bitcoin having ANY non-trivial value, and the reason for that is that Bitcoin has no cash flows and therefore cannot be valued. Other things that truly bother me about Bitcoin: 1) 88% of all Bitcoin wealth is held by fewer than 1% of all Bitcoin addresses. Since many of those addresses are held by "Satoshi Nakamoto" and a handful of technologists who mined Bitcoin before 2010, if Bitcoin becomes a store of value for the world it will create the most massive disparity of wealth distribution in the history of mankind. Socially, that is a poor outcome, especially for a currency that had an aspiration at one point to bank the world's poor. 2) Once Bitcoin rewards stop, having any significant amount of world wealth in Bitcoin would create a deflationary catastrophe at the first recession. The reason is that people would stop spending money - as they do in all economic downturns - and the world's governments would not be able to influence this behavior since they cannot create inflationary compensations within the currency system. So Bitcoin as a world currency would return us to the feast and famine economic cycle of the 1800s through 1930s. Essentially the inability to change the number of Bitcoins would neutralize any form of monetarist economics. This enriches Bitcoin at the cost of throwing the entire world into catastrophic depressions. That is a horrible trade off. What I like about Bitcoin: 1) Electronic currency is a powerful idea. There are 200+ such currencies. We don't need a currency to have any store of value function to deliver this advantage. 2) Decentralization is powerful. The idea that I can give a $10 donation to an African church without any middleman has value. I am totally willing to trade virtual currencies for fun. But what is happening with Bitcoin is going to soon become outright dangerous to the world's economy. This is a nearly worthless virtual currency that cannot be assigned any intrinsic value beyond what a transactional currency should receive, and it is going through a tulip mania price spiral that has no basis in economic valuation. Once again the world is proving that there is no end to our stupidity and greed, and in any period of history we can create tulip frenzies. There is no world in which Bitcoin ends well for anyone except those who sell at the top.
  5. I was reviewing container shipping today - and I caught that at the end of Dec 2015 and beginning of 2016 they were trading at hugely depressed price to sales ratio. They have been eight baggers since putting in those lows. This got me to thinking: does any vendor have a website or newsletter that creates an index for 20 to 50 different market sectors, then tracks their combined financial metrics over time? The point for those sectors that are cyclical would be to alert investors when an entire sector is trading at a historical low price to sales or to alert investors of potential market tops. For asset based companies like banks and insurance, you would track valuations against book, tangible book, etc. Today, there are not good ways for individual investors to get a comprehensive view of many different market sectors. You end up having to research individual names in each sector, and that is extremely time consuming for a large number of sectors.
  6. Coke is one of Berkshire's defining investments. Some of the reasons that Warren Buffett thought Coke was a perfect company was that it has low capital expenditures to support additional sales together with high barriers to entry and high consumer level brand awareness. Where can I find a good business model discussion that compares the economics of the Coke company against the economics of its bottlers? Obviously this will be primarily a comparison of capital costs required to support growth. If someone could post a URL to some good discussion that includes specific numbers about required capex for each business type (Coke versus prototypical bottler) I would enjoy reading that.
  7. I am still holding on to my High way bonds. I think if a debt restructuring is needed, it will not cut to as deep as my cost basis of 36 cents on the dollar. Since other munis sell around 3.5% coupon, both the coupon rate of 5% and the principle has room to be cut. Are your highway bonds secured or unsecured? Can someone talk to the issue of muni bond workouts: how often do unsecured government bonds get left with zero recovery in a workout? In corporate bankruptcies, it is of course quite common for unsecured bonds to be left with no recovery. If you got a muni bond secured by a particular tax at 36% of par that sounds like a good position. Secured. And the highway company has 100 Million free cash flow per year. Its situation is much better than the electric company. However, PR constitution says if the state runs out of resource to pay the GO bonds, then it can divert the resources from the utility companies to pay the GO bonds first. The constitution also explicitly says paying muni debt is the first priority, above all other things, like pension and wages. With that said, if there is no cash, there has to be some kind of restructuring. But I don't think it will be a huge cut. Which CUSIPs are you in?
  8. I am still holding on to my High way bonds. I think if a debt restructuring is needed, it will not cut to as deep as my cost basis of 36 cents on the dollar. Since other munis sell around 3.5% coupon, both the coupon rate of 5% and the principle has room to be cut. Are your highway bonds secured or unsecured? Can someone talk to the issue of muni bond workouts: how often do unsecured government bonds get left with zero recovery in a workout? In corporate bankruptcies, it is of course quite common for unsecured bonds to be left with no recovery. If you got a muni bond secured by a particular tax at 36% of par that sounds like a good position.
  9. I found two decent tracker bonds: PUERTO RICO COMWLTH General Obligation 8.0% 7/1/2035 CUSIP 74514LE86 PUERTO RICO ELEC PWR AUTH 5.25% 7/1/2040 CUSIP 74526QVX7
  10. Does anyone have CUSIPs for *uninsured* bonds with lots of liquidity, so we can establish a fair market price every day? Many of these bonds trade too infrequently. The two classes of bonds I want to track: * Puerto Rican General Obligation * PR Electric Power Authority
  11. Great, thank you. Are the column totals in those tables already discounted to present value using their discount rate of 6%? There is enough exposure there that I guess we have to dig in and understand better how they structure their exposure. Are they not responsible for the first X% of losses? How is their reinsurance structured? Does AGO do these things in similar ways across all of its obligations, or is it likely to be very different for each class of bond?
  12. What is the symbol? It's not DCI? I don't find DCILN as a symbol. Is it DCI.L? DCI.L has small return on equity and a massive premium to book value. What's the pitch for this?
  13. Massive negative return on equity and return on invested capital. Massive negative free cash flow. Very little top line growth. Had a two year run from $1.50 to the present $30. What is the case for a multi bagger on this?
  14. Look at page 21 of the URL you supplied: http://assuredguaranty.com/uploads/PDFs/AGM_1Q15_Supplement.pdf The table at the bottom of page 21 says the net par exposure of $4.0 Gross is only $2.2B. Unfortunately, the table at the top gives a calculation of "Gross Debt Service Outstanding". They do NOT define this term in their glossary. Nor do they supply a calculation based on net exposure. Really very frustrating. What is AGO's Net Exposure (who cares about gross?) including costs to service interest payments? There has to be a present value calculation for that 20 year stream of interest rate payments, otherwise how do you estimate an impairment of book value? I agree there are reasons to believe that there will not be a 60% wipeout of par value. But even if there is, AGO appears to be able to survive that. I just want to know where a safe number would be to draw a line in the sand, and I want that number to absorb a 60% wipeout for par, and added to that the present value of the net interest payment exposure.
  15. Of course it could happen. They are communists and it's clear they don't think like capitalists. That said, look at self-interest. They don't want to pay back the debt, so they are defaulting. What would be the advantage of closing their capital markets to foreigners, thereby completely starving Greek companies of capital? It's not like Brazil where so many foreigners came in that the currency was rising out of control. It's not clear how they would even benefit from capital controls on the stock market. In any case, I wouldn't dream of investing in Greece today. I want the default to be a done deal, Drachma a done deal, and I'm looking for the new currency to sell off steeply and then start to stabilize. That's the point I start thinking of making an investment in the Greek stock market. If there are going to be stock market capital controls, I hope we find out about those sooner rather than later.
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